Excerpts from San Francisco Chronicle/Carolyn Lochhead, 2/12/12, "Mortgage crisis losses - who pays?
....Mark Goldman, a loan officer and real estate lecturer at San Diego State University, said the median price of bank-owned property in California is about half the price of non-foreclosure sales. "When a bank takes a property back, if you're the next-door neighbor the value of your house is probably going to drop 50 percent," Goldman said.* "Is it good to pay off somebody's mortgage?" Goldman added. "That's a very unpopular notion. But is it good to put out the fire at a neighbor's house so your house doesn't burn down?"...
....Who bears the loss depends on who ends up holding the bag. "If the homeowner continues to make their mortgage, in effect they're eating it," Jaffee said. "If they default and hand the house back to the bank, it's the bank that eats it, or the investors who purchased the mortgage-backed securities. It's not a mystery." Read the full article.
* Note: ".. you're the next-door neighbor the value of your house is probably going to drop 50 percent" comment by Mark Goldman does not sound correct to me for our region.
Posted by Kathy Meeh